New Google venture plans neighborhood "built from the Internet up."

In 2016, Google Fiber began reconnoitering away from its plan to overbuild legacy incumbent telephone and cable company infrastructure with fiber to the premise telecom infrastructure in select metro areas of the United States. Taking on incumbents in existing parts of these metros proved too slow and costly and Google Fiber had no overwhelming technological or marketing advantage relative to them.

Another Google venture takes a different tack. Rather than overlaying fiber optic telecom infrastructure on an existing neighborhood, it would build an entirely new “smart” neighborhood where there are no incumbent providers. One that’s “built from the Internet up… merging the physical and digital realms,” according to a description of the project – dubbed Sidewalk Labs – in this Slate article. A pilot to roll out the concept in an undeveloped portion of Toronto, Canada Eastern Waterfront kicked off in late 2017. (Click here for news release).

Forecast of holographic interactive video within five years a pipe dream

Magic Leap CEO thinks volumetric video will be a part of live TV in five years - The Verge: In an interview with The Verge, Abovitz said that within “two to five years,” it will be technically possible for people wearing Magic Leap goggles to watch an NBA game (or other media) live, but in a holographic, interactive form. “You can stream over the top and to the screens, the virtual screens — you can do that now,” he said. “We’re looking at, how do you derive the information to move the volumetric stuff from that? And then, how do you do volumetric live-streaming as well ... if you time where processing power is going, particularly backends, you’re single-digit years away from that happening.”

Processing power indeed continues as it has to increase. But Abovtitz neglects to consider telecommunications infrastructure deployment advances far more slowly. According to the U.S. Federal Communications Commission, many millions of American homes lack telecom infrastructure capable of supporting high quality data, voice and video.

Too many remain embarrassingly served by 1990s DSL over aging copper lines, satellite Internet and even dialup. An interactive holographic experience will require enormous bandwidth only fiber optic lines can deliver. But most premises lack fiber connections and there's no coordinated national effort to modernize America's aging and outdated legacy metallic telecom infrastructure to fiber.

Trump budget proposal re telecom infrastructure likely an opening gambit

President Donald Trump's $200 billion infrastructure proposal released Monday includes $50 billion in funding for rural communities, but nothing specific for broadband deployment. Even though Trump has talked about the importance of expanding broadband in rural areas, he has not committed any funding to help build networks. Instead, his efforts have been aimed at eliminating red tape and regulation to get infrastructure built. The proposal, which makes no mention of broadband infrastructure, is meant to spur the investment of at least $1.5 trillion in infrastructure, according to a White House fact sheet. Under the plan, the feds would contribute a total of $200 billion over the next 10 years. About half that money would be used as part of an incentive program to entice private investors as well as city, state and local governments to invest in infrastructure projects.

Trump's infrastructure plan offers no funding for rural broadband - CNET

This CNET story is incorrect. The Trump administration's budget outline on infrastructure spending does in fact propose appropriations for the construction of advanced telecommunications infrastructure as detailed here.

The pushback from various stakeholders is because the proposal doesn't provide dedicated funding for a badly needed modernization of the nation's telecommunications infrastructure from the metallic networks of the telephone and cable TV era to fiber optic connections capable of handling ever growing bandwidth demand generated by digital content and services. The money is allocated in one big bucket for all types of infrastructure and not just telecommunications. The concern is states and localities might give priority to roads, highways, airports and government facilities, leaving little if any for telecommunications infrastructure.

Another big concern is Trump's plan offers too few federal dollars and would require states and local government and the private sector to shoulder the bulk of the cost -- a difficult proposition they continue to claw themselves back to fiscal health following the economic downturn a decade ago that severely reduced tax revenues. And a task made more challenging as a public pension funding crisis emerges in the states and localities.

It's best to view the administration's proposal as just that -- an opening gambit that will surely result in intense negotiations in the coming months as states and locals push their funding interests. It's quite likely given the large number of governors and local officials citing the need for advanced telecommunications infrastructure as critical in the 21st century economy -- including some in attendance at a White House meeting where the administration's infrastructure plan was announced -- that it will assume greater priority as negotiations move forward.

Trump administration proposes federal funding for infrastructure including advanced telecommunications

The Trump administration today issued an outline of its proposed legislative initiative to fund improvements to the nation’s aging infrastructure. While the proposal does not specifically set aside funding for advanced telecommunications infrastructure, the three components below authorize its funding. President Trump talked up the funding for advanced telecommunications infrastructure in remarks today to state and local officials at the White House. Trump said “it’s been very unfair what’s happened with broadband in terms of the Midwest and in terms, really, of rural areas.” At least four officials emphasized the need to fund it including Wisconsin Gov. Scott Walker and Virginia Gov. Ralph Northam. Northam termed it “very, very important” to his state. (Link to remarks here)

A proposed Rural Infrastructure Program would provide $50 billion for capital investment in rural infrastructure projects. Policy objectives would be to:

· Expand access to markets, customers, and employment opportunities with projects that sustain and grow business revenue and personal income for rural Americans;

· Enhance regional connectivity through public and private interregional and interstate rural projects and initiatives that reduce costs for sustaining safe, quality rural communities; and

· Increase rural economic growth and competitiveness by closing local infrastructure gaps in development-ready areas to attract manufacturing and economic growth to rural America.

Eighty percent of the funds would be distributed as state block grants to be used for rural infrastructure needs with 20 percent of the funds reserved for performance grants. A portion of the funds would be set aside for tribal and territorial infrastructure, with the remainder available to states. States would be required to delineate criteria for administering the funding for specific types of projects including telecommunications infrastructure. States would be required to publish a comprehensive plan demonstrating how the projects align with the evaluation criteria in the infrastructure incentives program, including state, local and private sector investment in eligible projects.

A Transformative Projects Program would provide $20 billion in funding for “ground-breaking project ideas that have significantly more risk than standard infrastructure projects, but offer a much larger reward profile.” The primary policy goal is to advance projects that significantly improving performance from the perspective of availability, safety, reliability, frequency, and service speed; substantially reduce end user costs for services; introduce new types of services; and improve services.

To ensure greater accountability and control over this category of projects, funding would be linked to terms and conditions of the award including achieving project milestones. Most of the funding (up to 80 percent) would be set aside for capital construction costs. Half could be used to cover project planning costs and up to 30 percent for proof of concept projects. Projects that utilize capital construction funding would be required to partner with the federal government to share the value of completed projects, based on the characteristics of project and its projected revenues. Technical assistance would be available from the federal government or funded by this program.

Expanded eligibility for Private Activity Bonds to fund public purpose infrastructure projects to include telecommunications infrastructure projects provided they are owned by state or local governments. Privately owned infrastructure may be funded, but must be available for public use and would be subject to state or local governmental regulatory or contractual control or approval.


The administration’s infrastructure proposal comes on the heels of a continuing budget resolution enacted the previous week that had reportedly appropriated $20 billion for infrastructure including telecommunications infrastructure in rural areas. The appropriation was not included in the enacted measure, H.R. 1892.

Since the administration’s infrastructure spending proposal specifically references “rural broadband” to identify eligible projects, a key question is how federal and state entities that would administer the funds define those words. The Rural Infrastructure Program defines “rural” as “areas with populations of less than 50,000.” How those areas are specifically defined takes on significance since in the United States, some exurban and even suburban areas lack advanced landline telecommunications infrastructure serving end user premises, redlined by legacy telephone and cable companies.

Ditto the term “broadband.” Legacy providers have defined the term based on the throughput of the connection serving end user premises rather than by delivery infrastructure. That in turn has led to more than a decade of disagreement among providers, consumers and regulators over what premises are deemed having adequate service to support high quality voice, data and video services. To ensure the best use of taxpayer funds, the federal government should fund only fiber optic infrastructure be connected to customer premises since only it can easily accommodate ever increasing bandwidth demand and isn’t prone to near term obsolescence.

Modernizing exurban telecom infrastructure to cut traffic congestion, long commutes

America's Other Housing Crisis: Undercrowded Suburbs - The Atlantic: The reality is that most of the housing stock and most of the land area of America’s metro areas is made up of relatively low-density suburban homes. And a great deal of it is essentially choked off from any future growth, locked in by outmoded and exclusionary land-use regulations. The end result is that most growth today takes place through sprawl. While urban density can house some people—mainly affluent and educated ones—the bulk of population and housing growth is shifted farther and farther out to the exurban fringe. That leads to more traffic and longer commutes, and the social and environmental consequences that flow from them, as this old suburban-growth model is stretched beyond its limits.

There's a disconnect between America's telecommunications infrastructure and this residential development pattern. The exurbs frequently suffer from cable company redlining and outmoded legacy telephone company copper cable plant. In addition, homes are often served solely by substandard, costly wireless services as landline providers concentrate on building fiber connections to multi-family dwellings (known as MDUs) in densely populated urban cores.

This is a point of overlap between telecommunications policy and regional planning. Modernizing telecom infrastructure at the fringes of metro areas to fiber to the premise (FTTP) can play a big role in reducing daily commute trips to urban centers by making it easier for knowledge workers to work in their residential communities.

Go suck a satellite

That's the message to adjacent landline redlined households seeing this tree placard pitching satellite Internet service. That's Comcast cable on the nearby utility pole. Dateline: El Dorado County, California.

Can The States Really Pass Their Own Net Neutrality Laws? Here’s Why I Think Yes.

Wetmachine Tales of the Sausage Factory Can The States Really Pass Their Own Net Neutrality Laws? Here’s Why I Think Yes.

This is Harold Feld's analysis of the question. Feld concludes that states can in fact regulate advanced telecom services. Feld reasons that while advanced telecommunications are clearly interstate, the scope of the U.S. Federal Communications Commission's jurisdiction isn't absolute and thus may not allow it to preempt the states should they enact statutes that codify the FCC's 2015 Open Internet rulemaking. The FCC is in the process of reversing the rulemaking that placed advanced telecommunications under Title II of the federal Communications Act, designating it as a common carrier utility.

The rulemaking's so-called "net neutrality" provision barring providers from blocking or throttling traffic over their networks has drawn concern that the providers might abuse their monopoly control over networks extract revenues.

That's a prospective concern that is less relevant and pressing in many states than the lack of advanced telecommunications infrastructure that leaves many homes, schools and small businesses unable to obtain service or offered substandard service options because their areas have been redlined by legacy incumbent telephone and cable companies. The FCC's Open Internet rulemaking requires service be provided upon reasonable customer request and specifically bars discriminatory redlining.

These mandates -- and less so net neutrality -- is why the providers and their trade associations will strongly oppose any proposed state legislation based on the federal rulemaking. State lawmakers are hearing far more vocal complaints from constituents that they've been refused service or forced to use pricy, substandard wireless services that don't meet minimum FCC requirements for advanced telecommunications than concerns providers will in the future block or throttle content. The volume and urgency of those complaints have been growing over the past decade or so. In addition, during that period and increasingly in recent years, state representatives have declared advanced telecommunications infrastructure critical to support commerce, government and education.

Soros gets it wrong: Telecom infrastructure is a monopoly, not Facebook and Google

Soros slams Facebook and Google as 'menace' to society, 'obstacles to innovation' - Business Insider: Facebook and Google effectively control over half of all internet advertising revenue. To maintain their dominance, they need to expand their networks and increase their share of users' attention. Currently, they do this by providing users with a convenient platform. The more time users spend on the platform, the more valuable they become to the companies. Content providers also contribute to the profitability of social-media companies because they cannot avoid using the platforms and they have to accept whatever terms they are offered.

The exceptional profitability of these companies is largely a function of their avoiding responsibility for — and avoiding paying for — the content on their platforms. They claim they are merely distributing information. But the fact that they are near-monopoly distributors makes them public utilities and should subject them to more stringent regulations aimed at preserving competition, innovation, and fair and open universal access.

Soros's position here is misguided. Facebook's and Google's online platforms are not natural monopolies like landline telecommunications infrastructure that delivers them to end users in their homes, businesses and institutions. Most people can choose between one and maybe two providers: a legacy telephone or cable company. These are truly public utilities since they are hardwired infrastructure unlike online social media platforms. They require fair and open universal access called for by Soros.

Facebook's and Google's online platforms are clearly hugely successful. But there's no guarantee they'll be around for decades like the telecom infrastructure that delivers them. Consumer preferences change and innovators create new services. It's a lot easier to do that with programming code and bits and bytes compared to relatively permanent telecom infrastructure as shown by the ongoing problem of service gaps that leave many premises unserved by landline infrastructure.

Both public and private sectors have role to play in U.S. telecom infrastructure modernization

State Senator hopes to spur rural broadband development in Alabama with incentive program - Yellowhammer News: Scofield notes that rural broadband is lacking because the return on investment isn’t there for providers who must build costly infrastructure to serve sparsely populated regions. While providers such as AT&T are investing in new technologies such as fixed wireless, which beam internet signals from cell towers to nearby homes, those speeds are only a slight step up from DSL.Some lawmakers are pressing for government to step into the fray, such as Sen. Tom Whatley (R-Auburn), who has introduced bills to allow the expansion of government-owned networks – such as the broadband system of Opelika Power Services located in his district. But Scofield takes a more limited government approach, noting that the private sector has both the expertise and the economies of scale to do the job more efficiently.

A more nuanced discussion is called for here. It's not an either private or public sector argument. Both the public and private sectors can play a role in the badly needed modernization and build out of America's telecommunications infrastructure. The public sector should own and fund its construction as it does roads and highways. To Scofield's point, the private sector has the expertise. It should build and maintain it just as private contractors do with roads and highways.

Show me the money: Congressman challenges argument that regulation greatest impediment to telecom infrastructure investment

Digital divide: Congress to push for better Internet access in rural areas: Yet the main obstacle to broadband expansion into rural areas is cost, said Pennsylvania Rep. Mike Doyle, the top Democrat on the House Communications and Technology Subcommittee. "It would require tens of billions of dollars to bring broadband to unserved and underserved parts of the country,” he said. “The private sector hasn’t done it because they know they wouldn’t make a profit on it.” Any rural broadband initiative without substantial new funding “would be nothing more than window dressing,” Doyle said.

The "window dressing" to which Doyle refers are assertions by Rep. Marsha Blackburn and other lawmakers that legislative solutions are needed to reduce regulatory burdens on ISPs to speed capital investment in "technology neutral" infrastructure (code for substandard mobile wireless and satellite versus fiber) to serve customer premises. It's refreshing to hear some economic honesty when it comes to tackling America's bad and worsening telecom infrastructure deficit.

Like Obama administration,Trump administration turns to symbolic window dressing rather than modernizing U.S. telecom infrastructure

Rural Internet to Be High Priority for Trump Administration | Successful Farming: Some steps can be taken in the near term to expand broadband networks, said Grace Koh of the National Economic Council. One would be clearer and easier rules for installing antennas on federal buildings and towers. “We will seek to use ‘dark fiber’ that the agencies have deployed in order to allow rural providers to interconnect and provide service to communities that have not had access to broadband before,” said Koh. “Dark fiber” is fiber optic cable that has been installed but is not in use. The administration will also coordinate funding, scattered among agencies, for broadband deployment and adoption. “We are hoping, at this point, to have a few immediate actions to start right away,” said Koh. “Certainly, we anticipate being able to make towers and other infrastructure from the Department of Interior available for collocation. This should cut down on tower construction costs and allow for providers to get their plant and equipment out much more quickly.”

The Trump administration like the Obama administration before it is engaged in symbolic window dressing rather than champion badly needed and aggressive efforts to modernize America's legacy metallic telecommunications infrastructure to fiber optic connections for all homes and businesses. These measures are symbolic incrementalism that will not make any meaningful progress toward that end because they don't deploy fiber over the "last mile" serving these premises.

An October 2017 report by the administration's Task Force on Agriculture and Rural Prosperity noted telecom infrastructure gaps are due the inability of investor owned providers earn a return on their capital investments in areas of the nation having lower population density. But while acknowledging that structural problem, it offers no alternatives, all but guaranteeing continued infrastructure deficits. It also advocates the use of wireless technologies rather than bringing connections to customer premises including satellite, fixed wireless, and cellular networks, calling it a cheaper "technology neutral" approach. However, these wireless technologies are limited by the laws of physics and have proven inadequate to accommodate the growing need for increased bandwidth.

"Mr. President, I think a bunch of broadband talk would be seen as a pretty weak response."

To Save the Internet We Must Own the Networks | By David Morris | Common Dreams

To Save the Internet We Must Own the Networks | By David Morris | Common Dreams:

The tools to build locally owned networks may well be there as the author of this article concludes. But adequate funding is another question. Constructing telecommunications infrastructure is very costly and labor intensive. It’s far easier to do in places where local municipal and cooperatively owned electric distribution and telecommunications networks already exist and have supporting infrastructure and funding mechanisms in place. Many of these entities got their start in the early in the 20th century with robust federal funding.

Nearly a century later, there is no meaningful federal funding to support the formation of new local entities to construct and operate advanced fiber telecommunications networks. State and local budgets are strained with obligations to repair and replace other aging infrastructure and honor pension obligations to their workers. They can’t be expected to provide billions to finance locally owned telecom networks.

Without government funding in the form of technical assistance grants and loans, expecting property owners and consumers to come up with the money is highly uncertain outside of highly affluent communities. As price takers rather than the price makers they would be the owners of local infrastructure, they are accustomed to purchasing “broadband” as a commodity monthly service and grudgingly tolerating exorbitant monthly costs and annual rate increases from incumbent telephone and cable companies. They’re unlikely to be motivated to put up the money to build an alternative -- albeit better -- network infrastructure than currently available to them unless they live in a neighborhood redlined by the incumbents.

Local ownership of telecom infrastructure is in concept a meritorious idea. But without a coordinated and well-funded federal program for it that recognizes that local infrastructure is essential to a vital interstate telecommunications network and not a local amenity like a park or playground, it remains only that.

FCC's repeal of Open Internet regulation sets stage for mega versions of 1990s era AOL, CompuServe walled gardens

The U.S. Federal Communications Commission has restored the regulatory framework that treats Internet protocol-based communications as an information service. The move reverses the commission’s 2015 Open Internet rulemaking classifying IP as a common carrier telecommunications utility under Title II of the Communications Act. So instead of an open Internet, the United States is turning back the clock to the closed, proprietary walled gardens that existed prior to the advent of the World Wide Web in the mid-1990s.

It’s even a greater back to the future policy move than appears at first glance. It sets the stage for media producers to consolidate with the companies that own the “pipes” – cable and telephone companies that serve more than three quarters of American homes, businesses and schools. After all, if those pipes are to be regulated as information services rather than telecommunications, companies that create information take on an integral role in this vertically integrated business model.

Consequently, the future could bring more combinations like Comcast’s acquisition of NBC or Verizon’s takeover of AOL and its pending deal for Yahoo! Under the new regulatory policy, it’s not inconceivable a big cable company or a telco could similarly make a play for Netflix.

Even Amazon, clearly in the information service business with its original offer of books and now its own production video content, could be a potential merger partner for one of the big pipe players. An Amazon-Verizon walled garden, for example, would provide this information content along with socks, towels and any other imaginable consumer commodity with both companies taking a nick of the revenues. Prime members might be eligible for a discounted monthly rate for Verizon connectivity.

The result would be a supersized version of the original big online information services: CompuServe and AOL. Both provided electronic mail along with content prior to the debut of the Netscape World Wide Web browser in the mid-1990s that swung open the garden gates to a vast digital universe. CompuServe even charged its subscribers by the minute to read “premium” content -- not unlike telephone long distance service. Such a billing scheme might well make a return under the FCC’s latest regulatory framework.

Last year Google abandoned its vision of building proprietary fiber to the home infrastructure to make its content more widely available. It could follow the adage, “If you can’t beat ‘em, join ‘em," and concede its effort to outshine legacy incumbent telcos and cablecos and their outdated metallic telephone and cable TV networks by merging with one of them to create a colossal proprietary information service.

Norman Macrae on telecommunications: Third of three great transport revolutions of past 200 years

Norman Macrae Surveys - help microeducate and microfranchise 3 billion jobs: "Telecommunications are now recognised as the third of the three great transport revolutions that have, in swift succession, transformed society in the past two hundred years. First, were the railways; second the automobile; and third, telecommunications-attached-to-the-computer, which was bound to be the most far-reaching because in telecommunications, once the infrastructure is installed, the cost of use does not depend greatly on distance."

Sens Heinrich, Heller Introduce Bipartisan Legislation To Increase High-Speed Internet Access In Indian Country | Benton Foundation

Senators Martin Heinrich (D-NM), Ranking Member of the Joint Economic Committee, and Dean Heller (R-NV) introduced the Tribal Connect Act of 2017 to improve broadband connectivity in Indian Country. The bill would increase access to the Federal Communications Commission's schools and libraries universal service support program, known as E-rate, that provides discounts to assist public schools and libraries obtain high-speed internet access and telecommunications at affordable rates.

Sens Heinrich, Heller Introduce Bipartisan Legislation To Increase High-Speed Internet Access In Indian Country | Benton Foundation

This is misguided policy that emulates the market segmentation strategy employed by incumbent telephone and cable companies that produced the very access disparities prompting this bill. Instead of targeting certain areas, buildings or ethnic groups, American telecommunications policy should be to construct fiber to the premise telecom infrastructure serving all -- and not just some -- premises.

As feds reclassify Internet as information service, will state and local governments finance fiber telecom infrastructure to deliver it?

With Net Neutrality Vote Looming, Cities Look to Publicly Owned Internet Options: (TNS) — It's going to cost somewhere between $70 million and $140 million, officials estimate, to build out the underground fiber-to-the-premises network that Boulder needs to make communitywide broadband a reality. The question for the City Council has never been whether this pursuit is worthwhile, as voters and elected leaders clearly agree on the value of open-access, affordable, high-speed Internet — the introduction of which would put pressure on the incumbent Comcast-CenturyLink duopoly to lower their prices and offer higher speeds. Rather, the question is: Who is going to pay for this buildout? And, for much of the past year, based on advice of a consultant, Boulder has paid $186,000 to date, the most likely answer seemed to be that the city would partner with an outside provider willing to pay for the buildout.

The economic question here is will households and businesses be willing to pay what they now pay for landline Internet access in the form of a tax or utility fee? This question now takes on greater significance as the federal government prepares to reclassify Internet service as an information rather than telecommunications service. That would leave building the fiber telecom infrastructure to deliver those information services to states and localities.

A related question is whether this hands off federal regulatory policy will prompt states to repeal existing statutes restricting the construction of telecommunications infrastructure owned by local governments? It would be difficult for states to justify maintaining these restrictions if the federal government doesn't consider Internet service as a telecommunications utility.

Legacy incumbent telcos, cablecos not entitled to state sanctioned monopoly without FCC enforcement of Title II universal service requirement

Colorado Localities Vote for Broadband, but Must Get Creative to Actually Deploy It: “Cities don’t do this because they want to compete with the incumbent — they do it because the incumbent refuses to,” said Tom Roiniotis, general manager of Longmont Power & Communications, which runs the network.

Why the refusal? One big incumbent legacy telco explains: 

Mark Soltes, CenturyLink’s assistant vice president in Colorado for public policy and government affairs, said the gaps in service across the state are due to rugged landscapes and far-flung population centers. “You’re looking at deployment in some places where there’s no payback,” he said.

That's the economic reality and there's nothing unreasonable in CenturyLink's justification. It owes its investors a profitable return. But if a public sector entity steps into the gap where the numbers don't pencil for CenturyLink or other legacy incumbent, that's hardly market competition. In an open market, competitors compete for market share and profitable business. That's not the case when a public sector entity provides an essential telecommunications utility that's not being provided a private sector player because there's not a sufficient business case to do so. It's simply serving the need where the private sector cannot.

Nor do incumbent telcos and cablecos have a right to a state sanctioned monopoly. Particularly when the U.S. Federal Communications Commission is not enforcing the universal service and anti-redlining requirements of its current Open Internet regulations based on Title II of the Communications Act and is poised to repeal those rules later this month. If the FCC did enforce the rule, then the incumbents would have a far stronger and reasonable position. At present, they do not.

FCC Chair Pai's distorted take on America's telecommunications infrastructure challenges

Why deregulating internet service makes sense - Chicago Tribune: FCC Chairman Ajit Pai says CEOs, investors and entrepreneurs are in the best position to invent and give consumers what they want, so they should be allowed to compete. “The No. 1 issue that I hear about is that people want better, faster, cheaper internet access,” Pai told The Wall Street Journal earlier this year. “They want access, period. To me at least, that’s the question the FCC should be squarely focused on: What is the regulatory framework that will maximize the incentives of every company to deploy the next generation of networks?”

This brings to mind the adage that to a carpenter, problems generally appear as protruding nails needing to be hammered down. So it's no surprise that to a regulator, America's telecommunications infrastructure deficiencies are a regulatory problem calling for a sharp whack of the regulatory hammer. Or in Pai's words, an overgrown regulatory thicket of weeds calling for the application of a weed whacker.

The problem is Pai has incorrectly framed both the problem and the solution. America's disparate and costly telecommunications services and particularly those serving buildings where people live, work and attend school are not caused by excessive regulation. In fact, the reverse could be plausibly argued. The Federal Communications Commission current Open Internet rules classifying Internet service providers as telecommunications common carrier utilities under Title II of the Communications Act require them to fulfill reasonable requests for service and not discriminate based on a customer's address. That operates so as to force them to upgrade and build out their networks to honor those requests.

Rather, they are primarily due to overreliance on legacy telephone and cable companies to make the necessary capital expenditures to transition their metallic cable plants to fiber. And to do so at a rapid pace in order to meet the burgeoning demand for connectivity of which Pai speaks. Their business models that require quick profits can't do that because it can take many years to achieve profitability on telecommunications infrastructure that costs many billions of dollars.

The Kafkaesque consequences of America's piecemeal approach to telecom infrastructure

City of Orr: Not enough fiber? | The Timberjay: The problem at this point really isn’t lack of fiber. There are multiple fiber conduits already in the ground, notes Long, but it’s getting the service out to customers that’s been the hurdle. He notes that Bois Forte tribal offices have exceptional broadband capacity, thanks to the middle-mile fiber project initiated by the Northeast Service Cooperative. But the private partners on that project, who were supposed to utilize that backbone to extend faster connections to residential and commercial customers, have been slow to deliver. “We have more capacity here at the government center than we know what to do with,” said Long. “But no one else can jump on board.”

This is the sad consequence of adopting a piecemeal, segmented view of telecommunications infrastructure: building part of it thinking someone else will come along to construct the rest to connect the end users. Of course, it doesn't always work out that way in America's Keystone Cops method of planning and deploying telecom infrastructure that produces Kafkaesque outcomes such as this suffered by the good folks of Orr, Minnesota.

Uwe Reinhardt on U.S. health care -- he might have said the same about telecom infrastructure

So if you ask me, "Are we ever succumbing to some notions of solidarity as a nation? I would say, "Not at all." I would describe us as a group of people who share a geography. That's a better description of Americans than that we're a real nation with a sense of solidarity.

Uwe Reinhardt, the German born Princeton University economics professor who died earlier this week at age 80, made that comment in the context of the American system of providing and paying for medical care. Americans, he observed, view medical care as a consumer commodity rather than a social service available to all citizens and hence tend to resist policies that would recast health and medical care as a common good. As a commodity, access to its purchase depends on one's income and financial assets. The result is very uneven access to care based on socio-economic status.

If Reinhardt had studied the U.S. telecommunications system as well as health care economics that was his area of expertise, he might have reached a similar assessment. When it comes to access to advanced telecommunications infrastructure, there is no sense of commonweal despite a common national geography. There is a sense that the telecommunications infrastructure one is served by is driven by individual choices on vocation and housing. If you choose to live in a neighborhood that has robust landline infrastructure rather than another that might only be a mile or two away or you earn too little to pay increasing and unregulated rates for commodity "broadband" service, that's your problem.

Rather than implement a federal policy that views telecommunications infrastructure as an interstate asset that benefits all Americans no matter where they live, we leave it to underfunded localities to try to cobble together their own disparate infrastructures with "wildly uneven" prospects, according to a recent compilation. Consequently rather than a coordinated national effort to modernize yesterday's metallic infrastructure designed for voice telephone and cable TV to modern fiber optic infrastructure capable of serving the advanced telecommunications of today and years to come, the United States is attempting to do so on the cheap in a piecemeal and highly incremental manner.

Google Fiber enters building by building urban battle for MDU connectivity

Google Fiber picks MDU cherries in Orange County: Google Fiber is figuring out how to play small ball and still get thousands of fiber to the home subscribers. In its latest blog post, Google tells how it’s expanding its fiber footprint – actually, making lots of tiny paw prints – in the southern California multi-dwelling unit market…

The subscription-based business model employed by incumbent telcos like AT&T as well as newer entrants like Google Fiber clearly favors density because it generates decent ROI on fiber to the premise (FTTP) capital investment. The higher the density the better as these players engage in a form of business urban warfare, fighting for market share building by building.

The problem is not everyone lives in or prefers to live in multi dwelling unit (MDU) properties. In MDUs, the vertically integrated model in which the providers own both the fiber infrastructure as well as proprietary telecommunications services delivered over it works well enough to make a strong business case. But when the density drops, it becomes iffy.

Ironically, that can leave even relatively affluent, low density neighborhoods of single family detached homes without fiber connections as the large investor-owned providers chase after dwelling density. Alternative business models are urgently needed. Without them, these higher value properties could end up becoming devalued due to their lack of fiber connectivity.

Fiber telecom infrastructure key, not "broadband speed"

Beyond Speed: FCC Should Focus on Broadband Experience: The market has evolved to where all-fiber connectivity is everyone’s goal, and it is time that the FCC got on board as well. In our comments to the FCC, the Fiber Broadband Association encourages the FCC to use an “all-fiber” metric — examining whether customers have access to all-fiber networks — to assess our country’s advanced telecommunications. “Robust fiber networks aren’t just capable of meeting community and enterprise needs throughout the United States; they’re essential to doing so,” says FBA President and CEO Heather Burnett Gold. “Fiber broadband has what it takes to take our country’s digital potential to the next level, and access to fiber is the critical first step.” If we want to accurately measure Americans’ access to sufficient broadband technology, looking just at speed won’t do. We must be looking at the technology that can actually provide high-performance, future-proof broadband service: fiber.

This organization is right on the money. As readers of this blog as well as my eBook Service Unavailable: America's Telecommunications Infrastructure Crisis know, I've emphasized the same point. The United States should focus like a laser (pun intended) on rapidly bringing fiber connections to every home, business and public institution. It's all about modernizing the nation's vital telecommunications infrastructure to fiber, not "broadband speed."

Fearing state imposed universal service obligations and rate regulation, legacy incumbent telcos, cablecos seek federal cover

A decade ago as Internet-based telecommunications grew and began transporting video content, telephone and cable companies feared local governments would using their video franchising authority established in the cable TV era require them to build out their infrastructures to ensure all residents had connections. The pre-Internet cable television franchise had evolved. It was no longer just about entertainment. In the Internet era, it was now the full panoply of advanced telecommunications services: voice and data as well as video. That in turn would stoke demand for better infrastructure that could reliably deliver them.

However, the legacy incumbent telephone and cable companies didn’t want to be forced to upgrade and build out their cable plants to serve all customer premises in order to do business in numerous localities. Their business models are based on serving selected neighborhoods within arbitrary “footprints” of “serviceable” premises and not entire local government jurisdictions.

They initially sought relief in Washington from Congress and the U.S. Federal Communications Commission to preempt state – and by extension local -- video franchise regulation. That would take care of a multiplicity of potentially troublesome local governments imposing universal service conditions under their video franchising authority. But the National Governors Association and the National Conference of State Legislatures pushed back, wanting to keep video franchising within state jurisdiction.

Incumbents were able to easily pivot from that objection to their Plan B to kill local government video franchising authority: lobby state governments to take it over from local governments. That effort was quite successful, with state video franchising laws put on the books in state after state in the mid-2000s. Those laws such as California’s Digital Infrastructure and Video Competition Act of 2006 did not mandate video franchisees provide universal service by some future date in areas where they were awarded state franchises, thus sanctioning neighborhood redlining. Consequently, local governments that often receive complaints from constituents denied landline connections to advanced telecommunications service by the big incumbents are powerless to do anything about it since those connections fall under state video franchising authority. Calling one’s state representative isn’t helpful either since the incumbents have captured legislatures and state telecommunications regulatory agencies by buying political influence with campaign contributions.

The fight over universal service has now shifted from video franchising to a new regulatory front. But this time around, the incumbents ironically want protection from the states. They’re concerned that if the federal government continues avoid enforcement of universal service policy expressed in the Communications Act as amended in 1996 or the FCC’s 2015 Open Internet rulemaking -- or scraps the Open Internet rulemaking altogether -- the states might opt impose their own universal service obligations.

The big legacy incumbents are also worried over the prospect of states regulating service rates as authorized in the federal Open Internet rulemaking. In the two years the Open Internet rulemaking has been the law of the land, the FCC hasn’t enforced that provision either.

Given widespread complaints voiced by state and local elected officials over both spotty access to service due to neighborhood redlining and affordability challenges for low income households, the incumbents have reason for concern. Two of the nation’s largest telephone and cable companies, Verizon and Comcast, respectfully, are urging the FCC to enact a “clear, affirmative” rule preempting states, declaring federal primacy over state regulatory jurisdiction. However, such a rulemaking could fail to hold up in court against a statute enacted by a state legislature given a 2016 decision by the United States Court of Appeal Sixth District in State of Tennessee et al. v FCC & USA finding the FCC could not preempt state law without express federal statutory authority to do so. That could set up a grueling battle in Congress between the big telcos and cablecos and the states over the regulation of advanced telecommunications services.

With the level of dissatisfaction in the states over access and affordability to landline delivered advanced telecommunications services, it’s not a fight the incumbents would automatically win despite the massive lobbying and campaign cash they can bring to bear in Washington. Many if not most candidates for state and local offices have made access to and affordability of advanced telecommunications services a campaign issue, terming it infrastructure vital to commerce, education and telehealth services. In addition, the level of need and public interest is much higher now than it was a decade ago when the incumbents were lobbying state governments to enact statewide video franchise laws.

Why legacy incumbent telephone and cable companies want FCC re-reclassification as information service providers. Hint: It’s not “net neutrality.”

If the U.S. Federal Communications Commission revokes its 2015 Open Internet rulemaking classifying Internet as a telecommunications common carrier utility under Title II of the Communications Act and restores the previous rule classifying it as information service under Title I of the law as expected before year end, it will set the stage for another round of litigation just as that which followed after the 2015 rule was adopted. This time however it will be public and consumer interests that will be challenging the FCC rather than legacy incumbent telephone and cable companies. And the governing statute, the Communications Act, might well be on their side. Section 3(a)(1)(41) of the Act as amended in 1996 defines an information service as follows:

INFORMATION SERVICE- The term `information service' means the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications, and includes electronic publishing, but does not include any use of any such capability for the management, control, or operation of a telecommunications system or the management of a telecommunications service.

The legacy incumbent telephone and cable companies want the FCC to define their Internet protocol delivered services using that definition, essentially equating them with services like LexisNexis or Intelius. Their problem however is these companies market Internet protocol-based telecommunications services such as data, voice and video delivered over their connections to customer premises. If they were merely information services like LexisNexis or Intelius, they wouldn’t market physical premise connections sold in throughput speed tiers for a monthly recurring fee. In so doing, they are arguably offering telecommunications service, which the statute defines as “the offering of telecommunications for a fee directly to the public, or to such classes of users as to be effectively available directly to the public, regardless of the facilities used.”

So what is the incumbents’ main motive in not wanting to be classified as telecommunications providers under Title II of the Act? Hint: It’s not “net neutrality” – the requirement they treat the bits and bytes of Internet protocol moving over their networks equally regardless of origin. The primary reason to avoid being classified as telecommunications providers is to escape the requirement in the Communications Act as amended in 1996 that they provide advanced telecommunications capability to all areas of the nation consistent with the public interest, convenience and necessity. It must enable users to originate and receive high-quality voice, data, graphics, and video telecommunications using any technology per Section 706(c)(1) of the statute. Elected policymakers at all levels of government generally agree advanced telecommunications capability is even more in the public interest and vital to the constituents they represent than it was when the 1996 Act was enacted two decades ago.

Incumbents also chafe at the prospect of price regulation as advanced telecommunications providers as authorized at Section 706(a) of the Act. Bottom line, if they are regulated solely as providing an information service and not as telecommunications common carriers, then they would be able to continue to redline neighborhoods they don’t wish to serve and charge customers in those they do whatever they wish – just as they have since the statute was enacted without meaningful regulatory enforcement. That might serve the interests of their shareholders, but clearly doesn’t comport with the public interest specified in the statute.

Legacy metallic telcos, cablecos fight rear guard actions against local FTTP initiatives

Municipal broadband advocates cry foul amid Seattle mayoral race: An ongoing debate over making broadband internet a public utility in Seattle is surfacing in the city's mayoral election, and advocates for the cause are crying foul over contributions large telecommunications companies have made in the race. Comcast and CenturyLink, two internet service providers in Seattle, collectively donated about $50,000 to a political action committee supporting Jenny Durkan, a candidate who opposes municipal broadband. Municipal broadband advocates say that the telecom companies’ donations represent efforts to maintain the duopoly they have in the region. The PAC is the Civic Alliance for a Sound Economy (CASE), which is sponsored by the Seattle Metropolitan Chamber of Commerce. “If I was running one of the most powerful monopolies of the modern era, I’d be donating as much as I could to take over local politics also,” said Christopher Mitchell, director of the Community Broadband Networks Initiative at the Institute for Local Self-Reliance.

Mitchell is correct. Due to high cost barriers to competitor entry, telecommunications infrastructure functions as a natural monopoly, a fact recognized in the previous regulatory regime governing analog voice telephone service. Title II of the U.S. Communications Act requires telephone companies to provide service to anyone requesting it and authorized state public utility commissions to regulate their rates since market forces cannot in a monopoly market. 

In its 2015 Open Internet rulemaking, the U.S. Federal Communications Commission made it clear Title II also applies to digital telecommunications delivered using Internet protocol technology. But the United States hasn’t found the regulatory fortitude to enforce that requirement, allowing landline advanced telecommunications providers to redline neighborhoods they don’t want to serve and charge whatever they want. Most pundits expect the FCC to repeal that rulemaking later this month and turn the clock back to the start of the new century when Internet was still a relatively novel “information” service where people “went online” with “broadband” (versus narrowband dialup) connections.

Meanwhile, telephone and cable companies find themselves fighting rear guard actions by localities all over the nation that like Seattle prefer fiber optic infrastructure over metallic cable that isn’t bundled with proprietary services -- known as an open access network. They're tired of waiting and understandably have lost confidence after years of incumbent promises of fiber upgrades that never materialized because their business models can't absorb the needed capital expenditures.

Had the nation engaged in sound public policymaking and prudent planning a generation ago when it became apparent telecommunications was transitioning from analog to digital Internet protocol, the legacy incumbents wouldn’t find themselves fighting these battles. But since they themselves heavily influenced public policy on telecommunications over the past few decades, they hoisted themselves on their own petard and became among the most hated companies in America.

Both legacy incumbents and consumers are wrong about competition in landline delivered advanced telecom service

Legacy incumbent telephone and cable companies and consumer and public interest advocates describe advanced telecommunications landline infrastructure as a competitive market. The former argue that it’s robustly competitive, affording consumers plenty of choices particularly in dense, urban areas. The latter complain there’s little or no competition in most areas where it’s a market duopoly at best. The choice is between either a legacy telephone company or a cable company. Oftentimes there is no choice at all, with only one of the two -- or neither -- offering service.

They’re both off base. Telecommunications infrastructure like that of other utilities delivering electric power, natural gas, water and sewer service to homes and businesses is a natural monopoly. Its inherent microeconomics don’t allow for a competitive market, one that by definition has many sellers and buyers with relatively equal access to information on price and quality.

Telecommunications service is like other utilities because it provides essential, necessary services for modern life. Thus it will always have many buyers but not a lot of sellers. That’s because the costs of installing and maintaining its delivery infrastructure are so high they deter other providers from entering the space. Would be providers are also deterred because it's inherently difficult to lure away customers from a well established incumbent since consumers don’t frequently go shopping for a new utility provider like they might for furniture, clothing or personal electronics. Hence, for most utilities there is only one provider or as noted earlier, perhaps two for advanced landline telecommunications service.

Both sides nevertheless continue to delude themselves and attempt to convince others they are right. The legacy incumbent phone and cable companies do so because they want to keep policymakers and regulators off their backs. They contend landline delivered advanced telecommunications is a competitive industry and thus requires only “light touch” regulation to protect consumers since market forces will adequately do the job.

Consumers believe the legacy providers have them over a barrel. They redline their neighborhoods and refuse to offer service on a par with that sold to nearby neighbors. Or they offer service, but with poor quality and reliability and exorbitantly priced. As they do with other services, the first inclination of consumers is to call for more competition. If telecommunications were a competitive retail market, they believe, then they could choose among a variety of providers clamoring for their business. The reality of course is far from that and complaints of shoddy customer service are rampant.

Both sides also mischaracterize public sector initiatives to build fiber optic infrastructure as market competition. Public sector entities aren’t out to compete for market share with incumbent legacy telephone and cable companies with the hope of driving them out of business as is the case with true market competition. They build advanced telecom infrastructure to facilitate economic development and achieve community goals.
 
Consumers want a competitive market for advanced telecommunications infrastructure, viewing it as a tonic for better quality service and value. It cannot and never will be a competitive market. The incumbent providers argue it's already a competitive market. It isn’t. It’s time to end the nonsense from both camps and their delusions of market competition in advanced landline telecommunications infrastructure and put ownership of it firmly in the public sector since it cannot function as a truly competitive market.

California like rest of nation suffers from poor advanced telecom service

The Social Cost of Weak Broadband Competition in California: Over the last 8 years, California has spent more than $200M funding projects and subsidizing service to close the broadband digital divide. While the intent is good, the results are limited given that home broadband subscriptions are unchanged today from 2010. It is clear that California cannot subsidize its way out of the digital divide. Despite the claims of Sosa and the Big 5, California’s uncompetitive fixed broadband service hurts everyone. The answer is to either promote retail competition or regulate the Big 5’s monopolies like we do in the energy sector.

California like the rest of the nation has the worst of all worlds: a naturally monopolistic advanced telecommunications market but no monopoly regulation as is done for electric power and natural gas utilities. The U.S. Federal Communications Commission nominally recognized advanced telecommunications as a natural monopoly utility in 2015, placing it under Title II of the Communications Act that regulated basic telephone service before it with rate regulation and a universal service requirement. "Nominally" because this regulatory scheme was put in place on paper only and not enforced.

The author is correct in noting we cannot extricate ourselves from this unfortunate circumstance with subsidies because they don't fundamentally alter it.